ECON 319 Lecture Notes - Lecture 18: Vilfredo Pareto, Pareto Index, Pareto Efficiency
Document Summary
Succeeded walras at the university of lausanne in 1893. Also trained as an engineer; discovered economics in 1891. Advocates a new term, ophelimity (from the greek, power to satisfy wants). One reason to move away from utility is that it also connotes usefulness, but some wants are harmful. The other reason was to make the term more empirical and hence less metaphysical. Humanity is subject to deception and immune to true progress or reason. He became a strong critic of economics. Humans are irrational and driven by fear and superstition. The modern era is not more rational. Aim for efficiency and justice via redistribution of income or wealth (taxes, subsidies, food stamps etc. Using statistical analysis, he established rigidity of income distribution, even under economic growth. Pareto index measures dispersion of income and wealth. It is impossible for the poor to appropriate a greater percentage of the pie, hence the futility of most social welfare programs.
